Cabrera Capital Daily Game Plan

Thursday May 5, 2022                                                        Trading
Desk: (312) 236-8907

TODAY’S GAME PLAN:  from
the trading desk, this is not research

DATA/HEADLINES   
8:30ET Weekly Jobless Claims, Productivity, Unit Labor Costs

TODAY’S HIGHLIGHTS:   

• CNBC poll shows 80% of small businesses seeing a recession this year

Global markets are mostly higher after the US Federal Reserve’s policy announcement calmed fears about bigger than anticipated rate hikes. German
factory orders fell 4.7%, more than anticipated after Russia’s invasion of Ukraine weighed economic prospects and disrupted supply chains. The Bank of England raised the base interest rate 25bps to 1%, the fourth consecutive increase, with a resolution on
bond sales delayed until the next decision and a mixed bag among the policy makers on rates guidance. The dovish read on the decision makes sense given the updated projections, which looks for a contraction next year.                                     

US EQUITIES: 

US equity futures take a pause following the S&P 500 index’s biggest daily advance since 2020 after Fed Chair Jerome Powell eased fears that
the central bank would ratchet rates up more steeply.  The Fed raised the fed funds rates by 50 basis points, as most expected. Powell said there’s a “broad sense” on the committee that 50-bp rate hikes should be on the table at the next “couple” of meetings,
adding the FOMC is not actively considering a 75-bp hike.                                                  

E-mini S&P futures -0.55%, Nasdaq -0.7%, Russell 2000 futures -0.6%, Dow futures -0.45%.

Twitter shares rose 3% in pre-market trading after Elon Musk secured about $7.1 billion of new financing commitments for his proposed $44 billion
takeover, the company said in a filing today. Shares of e-commerce companies from Etsy (ETSY) to Shopify (SHOP) are slumping in premarket trading on Thursday, following disappointing results.  US listed Chinese stocks pull back as investors mull an expanding
list of firms that face potential security delistings.  JD.com, Pinduoduo and Bilibili are among the latest Chinese firms that were added to SEC’s delisting watchlist. eBay fell 7% after the e-commerce firm gave a lackluster sales and profit outlook for the
second quarter. Albemarle (ALB) shares jump 14% after the company boosted its profit and sales guidance. Booking Holdings (BKNG) impressed analysts with April bookings topping 2019 levels and positive comments on summer travel. DigitalOcean (DOCN) shares are
down 9% after the company reported its first-quarter results and gave an outlook. Fastly (FSLY) shares are down 6% after reporting Q1 results and said its CEO is leaving the company.   

In Europe, indices pared early gains, but remain broadly higher with tech shares leading gains while insurance and travel shares underperform. 
The Stoxx Europe 600 Index is rising 1.2% as 18 of 20 sectors gained.  FTSE 100 is up 1.6% with Shell contributing most to the index gain, rising 3.4% after reporting record profit for the quarter. Airbus jumps as much as 8.5% on a “solid” 1Q report. UniCredit
jumps as much as 7.6% after first quarter revenue beat estimates. Other earnings beats include Argenx, Outokumpu, Netcompany. S4 Capital shares soared as much as 20% after the media company said it will publish its results for last year tomorrow, following
a lengthy delay. DAX +1.65%, CAC +2%. Tech +3%, Basic Resources +1.95%, Energy +1.8%. Insurance -1.2%, Travel -0.4%.

Shares in Asia rose with the MSCI Asia Pacific Index climbing as much as 1.2% before paring gains to around 0.4%. Tech and
materials were the biggest gainers in the region. China’s blue-chip CSI 300 closed slightly lower after a three-day holiday, but the Shanghai Composite climbed by 0.7%. Budweiser APAC climbed 6.8% after reporting an earnings beat. Thailand -0.55%, Hang Seng
-0.35%, CSI 300 -0.15%, India’s Sensex +0.05%, Shanghai Composite +0.7%, ASX 200 +0.8%, Vietnam +0.9%, Philippines +1%. Japan and South Korea were closed.

FIXED INCOME: 
                                       

Treasuries front-end briefly extends losses, following move in gilts after Bank of England hiked 25bp with three voters
looking for a bigger 50bp move. Bear-flattening move had the 5s30s spread near session lows into early the US session, unwinding portion of Wednesday’s post-Fed bull-steepening.  Yields cheapened as much as 6bp across front-end of the curve before retreating. 
In the aftermath of Wednesday’s policy announcement, overnight swaps are now pricing in close to 50bp rate hikes at the next three policy meetings. 10 year yield is now flat around 2.93%.       

METALS: 
                               

Gold extended gains from near a two-month low on signals that the U.S. Federal Reserve’s monetary tightening won’t be as
steep as many investors were anticipating. Spot gold is +1.1% after closing 0.7% higher yesterday. Silver is up 0.25%.       

ENERGY:     

Oil gains 1.5%, extending a rally sparked by the European Union’s plan for a phased ban on Russian crude. OPEC and its allies
once again ratified a small monthly increase in production, even as global markets look set to tighten because the European Union is considering banning supplies from Russia. Most OPEC+ members are already pumping at their maximum capacity, while Saudi Arabia
and the United Arab Emirates — which have so-called spare capacity to raise their production — say beefing up output would actually raise prices, not lower them.

CURRENCIES:   
 

The dollar turned higher, gaining against all major peers. The US Dollar Index is clawing back some of yesterday’s loss,
up 0.75%.  The pound is down 1.8% against the dollar after the BOE hiked rates to their highest since 2009 but revealed a deep split among the nine officials. The 25 bp move to 1% was backed by six, with three voting for 50 bps. But two others dissented from
the view that more tightening is needed. The Australian dollar also underperformed after weaker-than-expected Chinese economic data raised concerns over demand for the nation’s commodity exports. AUDUSD -0.85%, USDJPY +0.6%, NZDUSD -0.8%, EURUSD -0.55%     

Bitcoin is -0.75%, Ethereum -0.5%. 

TECHNICAL LEVELS: 
  

Colors within the report:
Green
is always the 200 period (day, week). Red is always 21,
Blue = 50,
Brown =
100  *Stars have added importance

UPGRADES:

• AGNC Investment (AGNC) raised to overweight at Piper Sandler; PT $13
• Esperion Therapeutics (ESPR) raised to neutral at JPMorgan; PT $6
• Fortinet (FTNT) raised to buy at Mizuho Securities; PT $350
• Momentive Global Inc (MNTV) raised to buy at Craig-Hallum; PT $18.50
• OMA ADRs (OMAB MM) raised to buy at Banorte; PT $158
• Sinclair Broadcast (SBGI) raised to overweight at Wells Fargo; PT $33
• Zymeworks (ZYME) raised to buy at Guggenheim; PT $14

DOWNGRADES:

• 5N Plus (VNP CN) cut to sector perform at National Bank; PT C$2.50
• Amarin ADRs (AMRN) cut to neutral at HC Wainwright; PT $3
• BRF ADRs (BRFS3 BZ) cut to underweight at JPMorgan
• BioAtla (BCAB) cut to neutral at Credit Suisse; PT $5
• Brinker (EAT) cut to inline at Evercore ISI; PT $40
• Connect Biopharma ADRs (CNTB) cut to neutral at Piper Sandler; PT $1.50
• Femsa ADRs (FEMSAUBD MM) cut to reduce at HSBC; PT $68
• High Liner Foods (HLF CN) cut to market perform at BMO; PT C$13
• HomeStreet (HMST) cut to underweight at Piper Sandler; PT $40
• Iamgold (IMG CN) cut to sector perform at National Bank; PT C$3.25
• Iamgold (IMG CN) cut to sell at Stifel Canada; PT C$2.50
• Murphy Oil (MUR) cut to neutral at JPMorgan; PT $51
• New Residential (NRZ) cut to neutral at Piper Sandler; PT $12
• Sprouts Farmers (SFM) cut to underperform at BofA; PT $25
• Tegna (TGNA) cut to equal-weight at Wells Fargo; PT $24

INITIATIONS:

• Agora ADRs (API) rated new outperform at Bernstein; PT $10
• BRP Inc (DOO CN) rated new buy at DA Davidson; PT C$134
• Baidu ADRs (BIDU) rated new market perform at Bernstein; PT $138
• LCI Industries (LCII) rated new buy at MKM; PT $153
• Patrick Industries (PATK) rated new buy at MKM; PT $93
• Polaris (PII) rated new neutral at DA Davidson; PT $99
• Thor Industries (THO) rated new neutral at MKM; PT $89
• Winnebago Industries (WGO) rated new buy at MKM; PT $79

David Wienke

Cabrera Capital Markets, LLC